What’s your definition of effective innovation? A clever idea? A novel product or service? As the owner of a business coaching firm, the key word for me is “effective”, and for innovation to be effective, it has to make my company money.
Dreams, wishes – these are all great things, but unless they bring in capital, they’re just air. So, here are some places to start to make innovation work for you!
1. Effective innovation requires the right “pricing” vehicle.
Pricing is tricky. It involves your needs as well as what your customer considers fair. But, either way, innovation will not be effective without the right business model:
* Cost-plus pricing – the easiest, yet sometimes criticized method involves setting the price at what it costs to produce/provide service, including expenses, adding in your target profit margin.
* Target-return pricing- set your price with the goal to get back money invested in the company based upon the projected sales. If you invested $ 10,000, how many products or services must you sell at what price point to get your money back in a specified time frame?
* Value-based pricing – the most “psychological” of the three involves pricing the product based on its value to a customer. If you’re product saves them 3 hours of productivity a day, for someone who made $ 50/hour, that’s $ 150, so you could probably charge $ 75 or more for it.
* Fair-Value pricing – setting your price at what the market supports. If customers want something badly enough, they’re willing to pay ridiculously high prices for that product. Just look at Tickle Me Elmo that customers were willing to pay $ 600+ for so their kid could have one for Christmas. But, customers are also savvy shoppers and know what the going rate is for products and services. The challenge is balancing your needs with their willingness to pay.
2. Innovations needs to be re-invented.
Large companies with huge budgets can brand their products and have that branding last for 10, 20, 100+ years, but good ideas are often copied and become common and no longer innovative. We see it in advertising all the time (buttons, badges, “likes” etc.) The irony is, if you become TOO innovative, you’ll lose the “stickiness” necessary for viewers to grow accustomed to seeing your product or service. So, there’s a balance you need to have to even out innovation and previously successful ideas.
3. Innovations come from making concepts “stick” in the minds of your customers.
I will never forget a shaving company’s line that went something like, “Our razors are so safe, even a baby can handle them”. The next image is a bald guy covered in shaving cream with clean razor-track cutting across his scalp. Behind him is a baby holding the foamy razor. Sometimes innovation means coming at your product from a completely different angle. Business coaching has nothing to do with marriage, yet we were able to show parallels between business ownership and getting married in order to sell our services. Again, it all gets back to “what sticks” in your customers’ minds and hearts.
4. Innovation is sometimes driven by going in the “exit” and out the “entrance”.
What if all streets were “one way”? How frustrating and boring would that be? Sometimes going “out” the “in” can be as simple as thinking of your existing product as your competition, and out-do yourself. The reason this is “forward” thinking is that eventually your product or service is going to need some renovating, and if you don’t have a product and/or service to replace or enhance it, you might as well go by way of the Titanic. Think of your product or service like you’re the product or service’s competition. How would you improve upon it? When you’re in a vehicle, you can look out the windshield at where you’re going, or out the back winder at where you’ve been. Turn the car around and you can look out the back window to see where you’re going and out the front window to see where you’ve been. Same vehicle – just a different view.
5. Who says innovation can’t be well thought out?
Of course innovation can be carefully planned. Perhaps the ideas will have to be new and hopefully surprising, but one can still save space for innovation and encourage it within the company. One company I was affiliated with gave incentives for innovative ideas that became part of the company culture in the form of $ 500 gift cards. Normally, innovation starts with the spark of an idea. Brainstorming often leads to different ways to approach the idea. Then one has to lay out the new idea, test it, and voila, a new concept is born.
6. Innovation that results in changing people’s lives is the crowning touch.
Ask customers what they want and you’ll get as many answers as the number of people asked, and then some. You simply will not be able to please everyone – so quit trying. Improving on something is not creating a new innovation. It’s just creating a derivative on an existing idea. And there’s nothing wrong with that. True innovation is revolutionary. The resulting change is mind-boggling. We’ve seen it all through life. The Pony Express was replaced by a postal system. The horse and buggy was replaced by the automobile. Typewriters were replaced by computers. The list goes on.
7. Innovation requires tough skin.
Sticking to your guns will be hard if everyone is poo-hooing your concept. But, if you don’t believe in it, why should anyone else? Many times you have a vision and are so clear about your idea, but when you try to explain it, you’re faced with blank – or worse, doubtful – looks. Learn the art of explaining things in different ways, remembering that some people are visual, others are auditory, and still others are kinetic processors. Speak their language when trying to share your ideas. Develop a Teflon attitude and let the criticism slide off you. It doesn’t mean you aren’t listening and taking note, but it does mean that you protect yourself and stay true to your ideas.
8. Business Owners have “hire” expectations.
Innovators are your “1st” string players. They are not only full of ideas, but can work independently to execute their plans. “1st” string players require less training and are eager to get things moving forward. “2nd” string players are good at doing what they are told, but often need innovative motivation! “3rd” string players are just what corporations love: the do-as-you-are-told types. A company full of “3rd” sting players will not advance. This last group likes routine and doesn’t favor change. There’s a place for each string, but hiring innovative people might be just what your company needs to excel.
In all . . .innovation is like a planted seed. With the right environment and conditions, innovation can flourish and help your company catapult to success.